Regional Economic Impacts of Cross-Border Infrastructure: A General Equilibrium Application to Thailand and Lao PDR
The evidence on the economic benefits of cross-border projects, and how they are distributed across countries and over time, is limited. This paper builds a general equilibrium model to analyze the economic impacts of the Second Mekong International Bridge linking Mukdahan Province in Thailand with Savannakhet Province in the Lao PDR. The authors find that the reductions in transport costs increase trade volumes and incomes in both regions, and that these benefits increase significantly over time. There is no evidence to support the common presumption that the benefits from cross-border infrastructure projects occur only, or overwhelmingly, in the richer region.